Apple’s iPhone and Global Price Disparities

Learn why the new iPhone 7 costs more in some global markets than others—and how to offer consumer-friendly options on your own global websites.

The wait is over for tech-geeks and smartphones shoppers worldwide: The new features and specs of Apple’s iPhone 7 were announced today to great online acclaim. (And more than a little snark, too.)

Americans have the most to rejoice about-they live in a country where iPhone prices are at their lowest. Global consumers don't have it so lucky.

Around the world, great disparities exist between iPhone prices. For instance, consumers in Indonesia and Sweden will shell out far more for an iPhone 6 than in the United States. This pales in comparison to how much more you’d pay in Brazil: $931, versus $598 in the States. For those keeping score, that’s 56% more.

What’s With the Different Prices?

So why do iPhone prices vary so wildly from country to country? Apple has been accused of price discrimination in the past, though this finger-wagging has decreased in recent years. (Though no one argues that Apple wrings as much profit as it can out of its device sales.)

Indeed, according to World Economic Forum data, the cost of an iPhone in Brazil has dropped considerably within the past five years. Just last year, that same iPhone 6 cost Brazilians a monstrous $1,250. This shift is largely credited to Brazil's currency gaining 10% against the dollar.

As a Cult of Mac writer noted in May, “(T)he fluctuating price of the iPhone isn’t just about Apple being greedy: rising and falling prices depend on exchange rates, import taxes, regional taxes and, in some cases, even seemingly unconnected rules like private copying levies.”

That’s what’s happening in Germany. There, Apple’s phones and tablets cost more due to a unique “agreement that Germany’s trade associations have made with rights holders, to cover ‘private copies’ of media made to your iPhone or iPad,” Cult of Mac reported in January. This extra cost is designed to offset any financial losses copyright holders might be experiencing due to pirated digital content. German consumers must pay several euros more, whether they have pirated tunes on their iPhones or not.

Fluctuating currency values don’t help, either. Last September, the weakened euro drove France’s iPhone prices sky-high. Then, an entry-level iPhone model cost over 30% more than the same model in the U.S. Consumers in Germany were similarly hit hard. In the UK, consumers paid nearly $185 more for the same unlocked device available to Americans.

Consumer perceptions (and advertised prices of products) are also influenced by taxes. Prices in the UK and other countries include sales tax, though this isn't the case in the U.S. and Canada-making North American sticker prices appear lower. The strength of the U.S. dollar further spiked prices in Canada and Australia last year.

To be clear, “Apple isn’t making 30% more revenue per iPhone in France than in the U.S.,” the Telegraph reported last year, “because a lot of the extra price is in taxes.”

Indeed, as the Telegraph story advised its British readers, “This doesn’t necessarily mean you should buy the iPhone … on your next trip to America. Even if you are in a state without sales tax, you’ll be expected to pay VAT on it when you arrive back in the UK.”

This value-added tax is quite high in Europe: from around 20% in Germany to up to 25% in Hungary, PhoneArena reported earlier this year.

Apple Controls the Sale

Internet message boards brim with global consumers who want to purchase lower-priced iPhones from Apple’s online U.S. store. The catch? Apple’s U.S. store does not ship products to addresses outside of the United States. Further, individuals “may not export any products purchased online from Apple,” the company warns.

U.S.-based customers can, however, use Apple’s U.S. site to purchase iPhones as gifts, and ship them to friends in markets including Mexico, more than a dozen countries in Europe, and four Asian countries: Indonesia, Malaysia, the Philippines and Thailand.

But not everyone around the world has such accommodating American friends ... and those that do may not live in the countries mentioned above. These consumers often concoct clever ways to purchase new unlocked iPhones from the U.S.—often via third-party sites like eBay—and ship them to their home markets. To work properly in overseas markets, these iPhones must be unlocked, and must not be associated with a local telephone carrier.

Package-forwarding services like MyUs offer tips on how to do this. “Even when you add in international shipping costs, it’s often still a lot cheaper to buy an iPhone straight from the U.S.,” MyUs recently advised.

Consumer-Friendly Solutions

We recently published a blog post about how European companies—in light of the increased criticism of geo-blocking, a common practice where businesses limit access to their international websites based on a user’s geographic location—can control geo-based pricing in consumer-friendly ways.

Companies from all continents, and in all industries, can benefit from this advice. By leveraging website translation and special technologies that MotionPoint provides, expanding businesses can serve their overseas customers in ways that generate more engagement and revenue. Such solutions include:

Firstly, companies that offer translated versions of their websites in locally-preferred languages will generate far more interest from consumers in target markets than websites published exclusively in English.

By translating not only on-site content but other critical elements such as URLs and sitemaps—and using proper linguistic “hreflang” tagging for search engines—organic traffic will increase dramatically.

Leveraging optimizations that improve on-site user experiences for global consumers will also incentivize customers to stay and shop. Such localizations can be used to create resonant campaigns, display market-specific inventories and more.

From scalable translation solutions to traffic- and engagement-boosting technologies, MotionPoint’s platform empowers companies to smartly increase cross-border traffic and sales across the globe, no matter what they may be selling—from fashion to international flights to iPhones, and beyond.